D.C. Bar Labor and Employment Law Section
April 6, 2009
New Whistleblower Protections for
Government Contractors and
Employees of State and Local
Governments
by
Robert B. Fitzpatrick, Esq.
Robert B. Fitzpatrick, PLLC
Universal Building South
1825 Connecticut Avenue, N.W.
Suite 640
Washington, D.C. 20009-5728
(202) 588-5300 (telephone)
(202) 588-5023 (fax)
fitzpatrick.law@verizon.net (e-mail)
http://www.robertbfitzpatrick.com (website)
Introduction
• The American Recovery and Reinvestment Act of
2009 (ARRA), P.L. 111-5, 123 Stat 115, recently
signed into law by President Obama, provides for
nearly $500 billion in spending to stimulate the
economy.
• However, those who receive those funds should be
aware that §1553 of the ARRA contains new
protections for public and private employees who
blow the whistle on gross mismanagement or
waste of covered funds, danger to public health or
safety related to covered funds, abuses of
authority relating to the use of the funds, or
violation of laws or regulations relating to the grant
of the funds.
Substantive Provisions
• Broad Definition of Employer
• Broad Scope of Subject Matter of
Disclosures
• Broad Class of Recipients of Protected
Disclosures
• Broad Scope of Protection
• Broad Scope of Prohibited Reprisals
Broad Definition of Employer
§1553(g)(4)-(5)
New whistleblower protections affect
employers receiving covered funds as:
• A contractor, subcontractor, grantee or
recipient;
• A professional membership organization,
certification or other professional body,
agent or licensee of the federal government,
or a person acting in interest of an employer
receiving covered funds; or
• A state or local government and any
contractor or subcontractor thereof receiving
covered funds.
“Covered Funds”
§1553(g)(2)
Any contract, grant or other payment
received by any non-Federal employer
if:
• Federal government provides any
portion of money or property that is
provided, requested or demanded; and
• At least some of the funds are
appropriated or otherwise made
available by the ARRA.
Broad Scope of Subject Matter of
Disclosures §1553(a)(1)-(5)
Disclosures are protected if they contain information
that employee reasonably believes evidences:
• Gross mismanagement of an agency contract or
grant relating to covered funds;
• Gross waste of covered funds;
• Substantial and specific danger to public health or
safety related to implementation or use of covered
funds;
• Abuse of authority related to implementation or use
of covered funds;
• Violation of law, rule or regulation related to an
agency contract (including the competition for a
contract) or grant, awarded or issued relating to
covered funds.
Scope of the Five Practices About
Which one can Complain
• The five types of disclosures covered by sections
1553(a)(1)-(5) are stated in language that is virtually
identical to the language contained in the federal
Whistleblower Protection Act (WPA). See 5 U.S.C.
2302(b)(8); see also Broida, A Guide to Merit Systems
Protection Law and Practice, ch. 13: Prohibited
Personnel Practices.
• Further, the language of the WPA is routinely construed
by the MSPB and the Federal Circuit. See, e.g., Smart
v. Dept. of Army, 98 M.S.P.R. 566 (2005); Downing v.
Dept. of Labor, 98 M.S.P.R. 64 (2004). Presumably the
inspector generals and federal courts will look to that
body of jurisprudence to interpret these provisions.
• An abuse of authority (§ 1553(a)(4)) is specifically
defined in § 1553(g)(1).
Gross Mismanagement of
Agency Contract or Grant
§1553(a)(1)
• “Gross mismanagement” for the purposes of the WPA has been
defined as a management action or inaction which creates a
substantial risk of significant adverse impact upon the
agency’s ability to accomplish its mission. White v. Dep’t of the
Air Force, 63 M.S.P.R. 90, 95 (1994).
• The Federal Circuit has held that in determining whether an
employee has made a disclosure protected by the WPA, the
court must look for evidence that it was reasonable for the
employee to believe that the disclosures revealed misbehavior
described by the Act. Lachance v. White, 174 F.3d 1378, 138081 (Fed. Cir. 1999); Chambers v. Department of Interior, 515 F.3d
1362, 1367 (Fed. Cir. 2008).
• In the context of gross mismanagement, the test is whether a
disinterested observer with knowledge of the essential facts
known to and readily ascertainable by the employee could
reasonably conclude that the actions of the government
evidence gross mismanagement. Lachance at 1381.
Gross Waste of Funds
§1553(a)(2)
• In order to make a disclosure of a “gross waste of funds” for
the purposes of the WPA, courts have held that the
disclosure must uncover more than a debatable or de
minimis expenditure. The disclosure must uncover an
expenditure that is significantly out of proportion to the
benefit reasonably expected to accrue to the government.
Embree v. Dept. of Treasury, 70 M.S.P.R. 79, 85 (1996); Crews
v. Department of Army, 217 F.3d 854 at *2 (Fed. Cir. 1999);
White v. Dep’t of Air Force, 391 F.3d 1377, 1381-82 (Fed. Cir.
2004).
• Disclosure of a “gross waste of funds” for the purposes of
the WPA is also governed by the Lachance test - to be
protected, the employee must have had a reasonable belief
that the disclosure uncovered a “gross waste of funds”.
Substantial and Specific Danger to
Public Health or Safety §1553(a)(3)
• For the purposes of disclosure of a “substantial and specific
danger to public health or safety” under the WPA, it has been
held that “revelation of a negligible, remote, or ill-defined peril
that does not involve any particular person, place or thing, is not
protected.” Sazinski v. Dep’t of Housing & Urban Dev., 73
M.S.P.R. 682, 686 (1997). It has further been held that disclosure
of a danger only potentially arising in the future is not a protected
disclosure. Herman v. Dep’t of Justice, 193 F.3d 1375, 1379 (Fed.
Cir. 1999). Rather, as indicated by the statutory language, the
danger must be substantial and specific. Id. In determining
whether an alleged danger meets this test, relevant
considerations include the likelihood of harm resulting from the
danger, when the alleged harm may occur, and the nature of the
potential harm. Chambers v. Department of Interior, 515 F.3d
1362, 1369 (Fed. Cir. 2008).
• For the purposes of the WPA, such a disclosure is also governed
by the Lachance test - to be protected, the employee must have
had a reasonable belief that the disclosure uncovered such a
danger.
Abuse of Authority Related to
Implementation or Use of Funds
§1553(a)(4), (g)(1)
• § 1553(g)(1) defines abuse of authority as “an
arbitrary and capricious exercise of authority
by a contracting official or employee that
adversely affects the rights of any person, or
that results in personal gain or advantage to
the official or employee or to preferred other
persons.”
• For the purposes of the WPA, such a
disclosure is also governed by the Lachance
test - to be protected, the employee must
have had a reasonable belief that the
disclosure uncovered such an abuse of
authority.
Violation of law, Rule or Regulation
Related to Agency Contract or Grant
§1553(a)(5)
• For the purposes of a disclosure of a “violation of
law, rule, or regulation” under the WPA, the courts
have held that to make a protected disclosure, a
whistleblower need only disclose what he reasonably
believes is an imminent – not an actual – violation of
a law, rule, or regulation. See, e.g., Reid v. Merit Sys.
Prot. Bd., 508 F.3d 674, 678 (Fed. Cir. 2007).
• In Drake v. Agency for Int’l Dev., 543 F.3d 1377, 1381
(Fed. Cir. 2008), the court held that whether an
employee’s disclosure was based on a reasonable
belief regarding a violation of a law, rule or regulation
turns on the particular facts of the case. (citing
Herman v. Dept. of Justice, 193 F.3d 1375, 1382 (Fed.
Cir. 1999)).
Broad Class of Recipients of
Protected Disclosures §1553(a)
Disclosures are protected under the Act if the employee
makes them to:
• Recovery Accountability and Transparency Board (socalled RAT Board is a body established by Section 1521
of the ARRA “to coordinate and conduct oversight of
covered funds to prevent fraud, waste, and abuse);
• Agency’s inspector general;
• Comptroller General;
• Member of Congress;
• State or federal regulatory or law enforcement agency;
• Person with supervisory authority over employee;
• Court or grand jury;
• Head of a federal agency; or
• A representative of any of the above.
Broad Scope of Protection
§1553(a)
• The Federal Circuit has previously construed the
WPA’s protections (5 U.S.C. §2302) to exclude
disclosures an employee makes in “merely
carrying out his required, everyday job
responsibilities.” Langer v. Dep’t of the
Treasury, 265 F.3d 1259, 1267 (Fed. Cir. 2001).
• By contrast, §1553(a) of the new ARRA expressly
includes disclosures “made in the ordinary
course of an employee’s duties” in the definition
of protected activity.
Broad Scope of Prohibited
Reprisals §1553(a)
• Section 1553(a)’s language regarding “prohibition of reprisals”
explicitly provides that employees of employers covered by the
act may not be “discharged, demoted, or otherwise
discriminated against as a reprisal for” making disclosures
protected by the act.
• Like other statutes with phraseology identical or similar to the
phrase “otherwise discriminated against,” presumably the
phrase will be broadly construed to include employment
actions such as oral or written reprimands, lateral transfers,
reassignment of duties, as well as many other actions that
“might well have dissuaded a reasonable worker from making
or supporting a claim.” Burlington Northern & Santa Fe Ry. Co.
v. White, 548 U.S. 53, 68 (2006) (quoting Rochon v. Gonzales,
438 F.3d 1211, 1219 (D.C. Cir. 2006).
• Comparison with the WPA does not seem to be particularly
helpful in this regard, since the “personnel actions” covered by
that act are much more narrowly and explicitly defined. See 5
U.S.C. § 2302(a)(2)(A).
Procedural Provisions
•
•
•
•
•
•
Investigations (§1553(b)(1)-(4))
Burdens of Proof (§1553(c)(1))
Determinations (§1553(c)(2))
Lawsuits (§1553(c)(3))
Remedies for Employee (§1553(c)(3))
Judicial Enforcement of Agency Action
(§1553(c)(4))
• Judicial Review (§1553(c)(5))
• Waiver of Rights (§1553(d)(1)-(3))
• Notice Posting (§1553(e))
Non-Preemption Provision
§1553(f)(1)-(2)
• Section (f)(1) states that nothing in § 1553
may be construed “to modify or derogate
from a right or remedy otherwise available to
an employees.”
• Section (f)(2) states that nothing in this
section of the ARRA “may be construed to
preempt, preclude, or limit the protections
provided for public or private employees
under State whistleblower laws.”
Investigations
§1553(b)(1)-(4)
• Complaints of reprisal are to be filed
with inspector general (IG) of
appropriate government agency having
jurisdiction over the covered funds.
• IG conducts investigation of complaint
and prepares report.
• As discussed herein, the statute
contains no time limit within which to
file a complaint with the appropriate IG.
Burdens of Proof
§1553(c)(1)
• The complainant must prove that a protected
disclosure was a “contributing factor” in the reprisal
• The complainant may meet this burden by use of
circumstantial evidence, including evidence that the
official undertaking the reprisal knew of the
complainant’s protected disclosure, or evidence that
the reprisal occurred within a period of time after
the disclosure such that a reasonable person could
conclude that the disclosure was a contributing
factor in the reprisal.
• The burden then shifts to the employer to show by
clear and convincing evidence that the employer would
have taken the action allegedly constituting reprisal,
even in the absence of the complainant’s protected
disclosure.
Determinations
§1553(c)(2)
• Head of agency concerned with
covered funds makes the determination
• Whether there is “sufficient basis” to
find a prohibited reprisal
• No required evidentiary hearing or
administrative appeal
Lawsuits (De Novo)
§1553(c)(3)
• Civil actions may be filed after exhausting
administrative remedies
• Exhaustion includes:
• Discontinuance of IG’s investigation;
• Issuance of agency head’s order denying relief; or
• Passage of 210 days after submission of complaint.
• Must file in U.S. district court in which alleged reprisal
occurred
• Not subject to amount in controversy requirements
• As discussed herein, the statute contains no
limitations period governing the filing of such a
lawsuit.
Remedies for Employee
§1553(c)(3)
•
•
•
•
•
Affirmative action to abate reprisal
Reinstatement with back pay
Compensatory damages
Employment benefits
Other terms and conditions to restore
employee to pre-reprisal position
• Award of costs and expenses, with
reasonable attorneys’ and expert fees
• No express caps or limits on damages
• No punitive or exemplary damages available,
reserved to government in enforcement
actions
Judicial Enforcement of Agency Action
§1553(c)(4)
• When it is found that a reprisal occurred, an
order is issued by the head of the agency
granting some form of relief, and if a person
fails to comply with the order, the head of the
agency may bring an enforcement action in
U.S. District Court.
• In such an action, the court may grant
“appropriate relief, including injunctive relief,
compensatory and exemplary damages, and
attorneys’ fees and costs.”
Judicial Review
§1553(c)(5)
• Any person adversely affected or aggrieved by an
order issued under §1553(c)(2) (under which the
relevant agency either denies that reprisal occurred
or finds that reprisal occurred and orders relief) may
obtain review of the order’s conformance with
§1553(c) and any related regulations in the U.S.
Court of Appeals for the circuit in which the alleged
reprisal occurred.
• Standard of Review: Administrative Procedure Act’s
guidance – court decides relevant questions of law,
interprets statutory provisions and determines
meaning and applicability of agency action.
Waiver of Rights
§1553(d)(1)-(3)
No waiver of substantive or procedural
rights by any:
• Agreement,
• Policy,
• Form or condition of employment, or
• Pre-dispute arbitration agreements
unless contained in collective
bargaining agreement.
Notice to be Posted
§1553(e)
• Section 1553(e) requires that any employer receiving
covered funds shall post a notice of rights and
remedies provided under this section.
• Nowhere, does the statute delegate to an agency the
responsibility to prepare such a notice, and even
though funds are being doled out, no such
government-issued notice has been approved.
• In the interim, employers ought to prepare their own
home-grown notices. See the draft prepared by Jack
Burgin published in his February 27, 2009 blog,
Poster for Stimulus Bill Whistleblower Provision, Our
Own Point of View, Feb. 27, 2009, available at
http://ourownpointofview.blogspot.com/2009/02/post
er-for-stimulus-bill-whistleblower.html.
Inspector General’s Right to
Interview Officers and Employees of
the Recipient of Covered Funds
• Does § 1515, which provides for Inspector General
access to certain records and employees, apply to
investigations being conducted by Inspector Generals
under § 1553 of whistleblower complaints?
• Employees should be aware of 18 U.S.C. § 1001 which
requires imprisonment for anyone who knowingly and
willfully:
• Falsifies, conceals, or covers up by trick, scheme, or
device a material fact;
• Makes any materially false, fictitious, or fraudulent
statement or representation; or
• Makes or uses any false writing or document knowing
the same to contain any materially false, fictitious, or
fraudulent statement or entry.
Contours of Protected Activity
•
The removal of documents and electronically stored information (ESI) from
the workplace by employees is increasingly a major problem for employers.
• With Mass Layoffs Comes the Potential for Mass Misappropriation,
Posting of Kurt Kappes & Jim McNairy to Trading Secrets Law Blog (Feb.
10, 2009, 17:52 EST), available at
http://www.tradesecretslaw.com/2009/02/articles/tradesecrets/with-masslayoffs-comes-the-potential-for-mass-misappropriation/
• Michelle Goodman, Stealing a Slice of the Company Pie, ABCNews.com,
Jan. 22, 2009, available at
http://abcnews.go.com/Business/Economy/Story?id=6699815&page=1
• Tracy L. Coenen, Fraud and the Economy: Correlation or Coincidence?,
Wisconsin L. J., Jan. 16, 2009, available at http://www.sequenceinc.com/index.php?option=com_content&view=article&id=301:fraud-andthe-economy-correlation-or-coincidence&catid=15:recent-articles-apress&Itemid=64
• Keep Your Documents Close and Your Flash Drives Closer, Posting of
Chad Wiener to E-Discovery Bytes (Feb. 4, 2009, 11:30 EST),
available
at http://ediscovery.quarles.com/2009/02/articles/corporate-recordretention/keep-your-documents-close-and-your-flash-drives-closer/
•
Niswander v. The Cincinnati Ins. Co., 529 F.3d 714, 2008 U.S. App. LEXIS 13284
(6th Cir. 2008) (majority sets forth a six-factor balancing test for determining
whether employee’s delivery of confidential documents to her attorney was
reasonable)
Scope of Actions Constituting
Retaliation
•
•
•
•
•
Section 1553(a) prohibits the discharge or the demotion of an
employee as a reprisal for a covered disclosure.
It also states that such employee may not be “otherwise
discriminated against as a reprisal” for a covered disclosure. SOX
has identical language. See 18 U.S.C. 1514A(c).
Most commentators assume that the language “otherwise
discriminated against” will be as broadly construed as the Supreme
Court construed the language of § 704(a) in Burlington Northern &
Santa Fe Ry. v. White, 548 U.S. 53 (2006).
The ARB in Melton v. Yellow Transportation, Inc., ARB No. 06-052,
ALJ No. 2005-STA-2 (ARB Sep. 30, 2008), stated: “[W]e see no
reason not to apply the Burlington Northern materially adverse test
to the STAA [Surface Transportation Assistance Act] and the other
retaliation statutes that the Department administers.” One member
of the panel (Judge Beyer) declined to adopt the Burlington
Northern test; whereas two members (Judge Transui and Chief
Judge Douglass) adopted the “materially adverse” standard set
forth in Burlington Northern.
Ernest F. Lidge III, What Types of Employer Actions are Cognizable
Under Title VII? The Ramifications of Burlington Northern & Santa
Fe Railroad Co. v. White, 59 Rutgers L. Rev. 497 (2007)
Scope of Actions Constituting
Retaliation Post-Burlington Northern
•
•
•
Ginger v. District of Columbia, 527 F.3d 1340,
1343-44 (D.C. Cir. 2008) (movement of police
officers from night shift to rotating shift).
Williams v. W.D. Sports, N.M., Inc., 497 F.3d
1079, 1090-91 (10th Cir. 2007) (former
employer’s opposition to plaintiff’s claim for
unemployment compensation benefits)
Kassner v. 2nd Avenue Delicatessen Inc., 496
F.3d 229, 242 (2d Cir. 2007) (alleged changes
of work stations and work shifts for waitress
established genuine issue of material fact on
question of adverse employment action)
Contributing Factor
§1553(c)(1)(A)(i)
•
•
•
The complainant’s burden is merely to establish that reprisal was a
“contributing factor”.
Several courts have discussed “contributing factor” causality. For
example, the D.C. Court of Appeals has had the opportunity to
define the term “contributing factor” which is contained in the D.C.
Whistleblower Protection Act (D.C. Code Ann. § 1-615.52(a)(2)))
which defines a “contributing factor” as “any factor which, alone or
in connection with other factors, tends to affect in any way the
outcome of the decision.” See Crawford v. Dist. of Columbia, 891
A.2d 216 (D.C. 2006);see also Johnson v. Dist. of Columbia, 935
A.2d 1113 (D.C. 2007).
A “contributing factor” appears to be akin to a “motivating factor,”
phraseology contained in the 1991 Amendments to the Civil Rights
Act of 1964, and the phrase, a “contributing factor” would appear
to not incorporate any notion of “but for” causation. See, e.g.,
Gross v. FBL Financial Servs., Inc., No. 08-441 currently pending
decision from the Supreme Court. See oral argument transcript of
March 31, 2009
http://www.supremecourtus.gov/oral_arguments/argument_transcri
pts/08-441.pdf
Circumstantial Proof of a
Reprisal: Knowledge Alone?
• § 1553(c)(1)(A)(ii) “Use of Circumstantial Evidence. A
disclosure may be demonstrated as a contributing factor
in a reprisal for purposes of this paragraph by
circumstantial evidence including: (I) evidence that the
official undertaking reprisal knew of the disclosure; or (II)
evidence that the reprisal occurred within a period of time
after the disclosure such that a reasonable person could
conclude that the disclosure was a contributing factor in
the reprisal.”
• Does § 1553(c)(1)(A)(ii)(I) mean that knowledge alone is
circumstantial evidence that there was a reprisal because
of a covered disclosure, shifting the burden to the
employer to demonstrate by “clear and convincing”
evidence that the action taken against the complainant
would have been taken in any event?
Circumstantial Proof of a Reprisal:
Temporal Proximity Alone?
• § 1553(c)(1)(A)(ii) “Use of Circumstantial Evidence. A
disclosure may be demonstrated as a contributing factor in
a reprisal for purposes of this paragraph by circumstantial
evidence including: (I) evidence that the official undertaking
reprisal knew of the disclosure; or (II) evidence that the
reprisal occurred within a period of time after the disclosure
such that a reasonable person could conclude that the
disclosure was a contributing factor in the reprisal.”
• Does § 1553(c)(1)(A)(ii)(II) mean that proof of temporal
proximity between the disclosure and the alleged retaliatory
act alone sufficient circumstantial evidence to shift the
burden of proof to the employer to demonstrate by “clear
and convincing” evidence that the action would have
happened in any event?
• Undoubtedly, the IG’s and the courts will debate as to what
constitutes temporal proximity.
Temporal Proximity
• Jones v. Bernanke, 2009 U.S. App. LEXIS 4539 (D.C. Cir. Mar. 6,
2009) (Employee’s negative performance reviews following
closely behind employee’s request for an EEOC hearing may, on
remand, support an inference of retaliation even though it
occurred almost a year after the initial filing of charges.)
• Hamilton v. Gen. Elec. Co., 2009 U.S. App. LEXIS 2725 (6th Cir.
Feb. 12, 2009) (Employer’s increased scrutiny over employee
after employee filed EEOC complaint and termination only three
months later sufficiently established temporal proximity and
causation requirements).
• Fabela v. Socorro Indep. Sch. Dist., 329 F.3d 409 (5th Cir. 2003)
(Employer’s justification of decision to terminate employee
based partially on employee’s “unsubstantiated EEOC charge” 5
years earlier sufficiently established causation requirement)
• Troy B. Daniels & Richard A. Bales, Plus at Pretext: Resolving
the Split Regarding the Sufficiency of Temporal Proximity
Evidence in Title VII Retaliation Cases, 44 Gonz. L. Rev. ___
(forthcoming 2009), available at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1286132
• Justin O’Brien, Note, Weighing Temporal Proximity in Title VII
Retaliation Claims, 43 B.C. L. Rev. 741(2002)
Clear and Convincing Evidence
•
•
Once the complainant has demonstrated that a protected disclosure
was a “contributing factor” in the reprisal, the agency must find for
the complainant unless the non-Federal employer demonstrates by
“clear and convincing” evidence that the non-Federal employer would
have taken the action constituting the reprisal in the absence of the
disclosure.
Clear and convincing evidence is “[e]vidence indicating that the thing
to be proved is highly probable or reasonably certain.” Peck v. Safe
Air International, Inc., ARB No. 02-028 at 6, ALJ No. 2001-AIR-3 (ARB
Jan. 30, 2004) (citing BLACK'S LAW DICTIONARY 1201 at 577 (7th ed.
1999)) (emphasis added). This standard of evidence is a higher
burden than “preponderance of the evidence,” but less than “beyond
a reasonable doubt.” Duprey v. Florida Power & Light Co., 2000- ERA5 at 4 (ALJ July 13, 2000), aff’d, (ARB Feb. 27, 2003) (citing Grogan v.
Garner, 498 U.S. 279 (1991)). As the Eleventh Circuit observed in a
nuclear whistleblower case employing the same burdens of proof,
“For employers, [the clear and convincing evidence standard] is a
tough standard, and not by accident. Congress appears to have
intended that companies in the nuclear industry face a difficult time
defending themselves.” Stone & Webster Eng’g Corp. v. Herman, 115
F.3d 1568, 1472 (11th Cir. 1997).
Clear and Convincing Evidence
• “Clear and convincing” evidence has been defined
for purposes of MSPB proceedings in 5 C.F.R.
1209.4(d) as that “measure or degree of proof that
produces in the mind of the trier of fact a firm belief
as to the allegations sought be established.” See
also Price v. Symsek, 988 F.2d 1187, 1191 (Fed. Cir.
1993) (“evidence which produces in the mind of the
trier of fact an abiding conviction that the truth of a
factual contention is highly probable”); Broida, A
Guide to Merit Systems Protection Board Law and
Practice, ch. 13: Prohibited Personnel Practices.
Extensions of Time to the IG
• Section 1553(b)(2)(B) contains rather extraordinary
provisions regarding extensions of time for the IG to
complete his/her investigation.
• Without an extension, the IG investigation is to be
completed within 180 days. Section 1553(b)(2)(B)(i)
provides that the complainant can agree to confer an
extension of time on the IG and (B)(ii) provides that
the IG, on his/her own, may extend the period for not
more than 180 days, provided the IG provides a
written explanation for the extension.
• This language seems to suggest that, with
complainant’s consent, the IG can obtain virtually
unlimited extensions of time; whereas without the
complainant’s consent, the IG is limited to a single
extension of 180 days and must provide a written
explanation.
Reasonable Belief Test:
Objective or Subjective?
•
•
•
•
The language of the statute (“the employee reasonably believes” (§ 1553(a)))
is virtually identical to §806 of SOX, and §806 has been construed to establish
an objective reasonable belief standard.
See, e.g., Tuttle v. Johnson Controls Battery Div., 2004-SOX-76 (ALJ Jan. 3,
2005) (where the ALJ explained, “Protected activity is defined under SOX as
reporting an employer’s conduct which the employee reasonably believes
constitutes a violation of the laws and regulations related to fraud against
shareholders. While the employee is not required to show the reported
conduct actually caused a violation of the law, he must show that he
reasonably believed the employer violated one of the laws or regulations
enumerated in the Act. Thus, the employee’s belief “must be scrutinized under
both subjective and objective standards.”). Nonetheless, it may be argued that
the Congress’s language incorporates a subjective reasonable belief test.
In other words, if complainant can demonstrate that he/she actually believed
that there was one or more of the prohibited practices referenced in §
1553(a)(1)-(5), then even though an objectively reasonable person might well
not have had such an opinion, the complainant’s disclosure is nonetheless
protected.
• Given the uniform construction of §806 of Sox, this argument would not
appear to have much traction.
Lawrence D. Rosenthal, To Report or Not to Report: The Case for Eliminating
the Objectively Reasonable Requirement for Opposition Activities Under Title
VII’s Anti-Retaliation Provision, 39 Ariz. St. L. Rev. 1127 (2007)
Retaliation – Counterclaims
•
•
•
•
•
•
An issue that has arisen with some frequency recently is whether an
employer’s counterclaims against the employee are actionable retaliation.
We can expect this issue to arise in § 1553 litigation.
Gross v. Akin, Gump, Straus, Hauer & Feld, LLP, 2009 U.S. Dist. LEXIS
16427 (D.D.C. Mar. 3, 2009)
Plaintiff employee sued Defendant for age discrimination.
During discovery, employer found information to support counterclaim.
Plaintiff counterclaims for retaliation based on exercise of rights under
the ADEA and DC HRA.
Court dismisses employee’s counterclaim, holding that counterclaim is
not actionable under Burlington Northern because:
• Plaintiff was not an employee of Defendant when Defendant filed the
counterclaim,
• Counterclaim could not actually dissuade Plaintiff from filing his
claim, and
• Rule 13 of Fed. R. Civ. Pro. required Defendant to file counterclaim in
this case.
Retaliation - Counterclaims
•
•
•
•
•
Darveau v. Detecon Inc. 515 F.3d 334, 343 (4th Cir. 2008) - Court holds that “filing a
lawsuit alleging fraud with a retaliatory motive and without a reasonable basis in fact or
law” constitutes adverse employment action required to support a claim of retaliation
for bringing a suit under the FLSA against an employer.
Hernandez v. Crawford Bldg. Material Co., 321 F.3d 528, 532 (5th Cir. 2003), plaintiff sued
for race discrimination and employer counterclaimed for theft, employee
counterclaimed for retaliation based on employer’s counterclaim and trial judge
dismisses employee’s counterclaim for lack of lack of proof.
• Fifth Circuit reverses and dismisses, noting that district courts in other circuits
have held that filing a suit or counterclaim can support a lawsuit premised on a
theory of retaliatory employment action. See Beckham v. Grand Affair of N.C., Inc.,
671 F. Supp. 415, 419 (W.D.N.C. 1987); EEOC v. Va. Carolina Veneer Corp., 495 F.
Supp. 775 (W.D.Va. 1980)
Timmerman v. U.S. Bank, N.A., 483 F.3d 1106 (10th Cir. 2007) - Court holds that a
meritorious counterclaim, based on plaintiff’s directing bank funds to her own account,
would not support a retaliation claim, relying on Bill Johnson’s Restaurants, Inc. v.
NLRB, 461 U.S. 731, 743 (1983) (refusing to enjoin a “well founded lawsuit . . . even if it
would not have been commenced but for plaintiff’s desire to retaliate against
[defendant] for exercising [his/her] rights.”)
Walsh v. Irvin Stern’s Costumes, No. 05-2515, 2006 WL 2380379 (E.D. Pa. Aug. 15, 2006) Court holds that threatening to accuse plaintiff of a crime is an adverse employment
action.
Zakzrewska v. New School, 543 F. Supp. 2d 185 (S.D.N.Y. 2008) - Plaintiff, in a
discrimination case, sought to amend her complaint to add a retaliation claim because
she learned in discovery that Defendant had been covertly monitoring her personal emails. Court allowed the amendment on grounds that a jury might conclude that such
activity (even if unknown to plaintiff at the time of the monitoring) might persuade a
reasonable person not to file a discrimination complaint.
Retaliation - Counterclaims
• In evaluating whether a claim by an employer against
an employee constitutes actionable retaliation, the
courts often look to the Noerr-Pennington doctrine.
• California Motor Transport Co. v. Trucking
Unlimited, 404 U.S. 508, 511 (1972)
• United Mine Workers v. Pennington, 381 U.S. 657
(1965)
• Eastern R.R. Presidents Conference v. Noerr
Motor Fright, Inc., 365 U.S. 127 (1961)
Total Absence of Statutes of
Limitations
• Section 1553 nowhere sets forth a time limit within which
to submit a complaint to the appropriate Inspector
General.
• And, nowhere does § 1553 set forth a time limit within
which a civil action must be filed after the employee has
exhausted administrative remedies.
• Some have suggested that for one or both time limits, the
courts should look to the four year federal catch-all
statute of limitations which was last discussed by the
Supreme Court in Jones v. R.R. Donnelly & Sons Co., 541
U.S. 369 (2004) (construing 28 U.S.C. § 1658 which reads
as follows: “Except as otherwise provided by law, a civil
action arising under an Act of Congress enacted after the
date of enactment of this section may not be commenced
later than 4 years after the cause of action accrues." 28
USC § 1658(a)). Clearly, § 1658 would only apply to a civil
action, and would not resolve the time period for filing
with the IGs.
Total Absence of Statutes of
Limitations
• Others have suggested that the ongoing
debate among the federal courts regarding
the time limits for federal ADEA may provide
some answers. See Price v. Bernanke, 470
F.3d 384 (D.C. Cir. 2006); Burzynksi v. Cohen,
264 F.3d 611 (6th Cir. 2001).
Garcetti Trumped
• Garcetti v. Ceballos, 547 U.S. 410 (2006), involved the
First Amendment Free speech protections for
government employees. The plaintiff was a district
attorney who claimed that he had been passed up for a
promotion by criticizing the legitimacy of a warrant. The
Court ruled that because his statements were made
pursuant to his position as a public employee, rather
than as a private citizen, his speech had no First
Amendment protection.
• Section 1553(a) specifically states that an employee who
makes a disclosure “in the ordinary course of an
employee’s duties” is a protected disclosure.
• Thus, the lawyer in the employer’s office of general
counsel who blows the whistle is protected, and some
rather troubling ethical issues shall have to be resolved.
• Internal auditors and compliance officers, who make
disclosures, are protected, and similarly there are some
troubling “ethical” issues to be resolved.
FEDERAL ACQUISITION REGULATION (FAR):
Contractor Business Ethics Compliance
Program and Disclosure Requirements
• On Nov. 12, 2008, the new FAR rule (73 Fed. Reg.
67064), was issued, requiring federal contractors
and most subcontractors to make mandatory
disclosures to agency Offices of Inspector General
and Contracting Officers whenever they have
“credible evidence” of criminal violations, a civil
False Claims Act violation, or a “significant
overpayment” in connection with the award,
performance, or close-out of a government contract
or subcontract. These requirements took effect
December 12, 2008. In addition they contain a “look
back” requirement for certain criminal or civil False
Claims Act violations and significant overpayments
that occurred before that date.
Reinstatement
• Section 1553(c)(2)(B), which provides that an
agency head’s order may include
reinstatement, makes no reference to front
pay as an alternative.
• Presumably, the courts will read that
alternative into the statute as they did under
Title VII of the 1964 Civil Rights Act with the
proviso that reinstatement is the preferred
remedy. Like Title VII, there may be a dispute
as to whether judge or jury determines the
amount of front pay.
Compensatory Damages
• Section 1553(c)(3) provides that the complainant in a civil
action may seek “compensatory damages”.
• Compensatory damages are nowhere defined in the statute.
• Thus, the agencies and the courts shall have to determine
whether so-called hedonic or loss of enjoyment of life
damages are awardable; whether tax bump relief is
encompassed; whether lost opportunity damages are
obtainable; and whether lost future earnings are permissible.
• Some guidance may be gleaned from the courts’
interpretation of similar language in other statutes. For
example, the whistleblower protection provisions of the
Energy Reorganization Act, 42 U.S.C. § 5851, and the
Wendell H. Ford Aviation Investment and Reform Act for the
21st Century (AIR 21), 49 U.S.C. § 42121, also provide for
compensatory damages and do not define the term. DOL
has construed the term to include damages for emotional
distress, humiliation, and loss of reputation. See, e.g.,
Hobby v. Georgia Power Co., ARB No. 98- 166, ALJ No. 1990ERA-30 (ARB Feb. 9, 2001).
Attorneys’ Fees
• Section 1553(c)(2)(C) provides that the agency head’s
order may require the employer to “pay the
complainant an amount equal to the aggregate
amount of all costs and expenses (including
attorneys’ fees and expert witnesses’ fees) that were
reasonably incurred by the complainant for, or in
connection with, bringing the complaint regarding the
reprisal . . .”
• Given that the Congress did not use its usual
language providing for an award of reasonable
attorneys’ fees, but rather used the phraseology
“reasonably incurred,” does that suggest that fees
will only be awarded to complainant to reimburse
him/her for fees that they actually paid to a lawyer? In
other words, are contingent fees in any jeopardy as a
result of this unusual language?
Attorneys’ Fees
• Section 1553(c)(3), in describing the relief available to
the plaintiff in a de novo civil action, states that “the
complainant may bring a de novo action at law or
equity against the employer to seek compensatory
damages, and other relief available under this
section…” (italics supplied)
• The question naturally arises as to what does the
reference to “other relief available under this
section” mean. Does this sweep in the full panoply
of relief described in § 1553(c)(2) and § 1553(c)(4)?
Unquestionably, there will be major battles regarding
the remedies available to plaintiffs in (c)(3) actions.
Attorneys’ Fees
• Section 1553(c)(2)(C) also contains yet another oddity.
• It states that the “aggregate amount of all costs and
expenses . . . that were reasonably incurred by the
complainant . . . [shall be] determined by the head of
the agency or a court of competent jurisdiction”.
• The addition of the latter phrase seems odd and
potentially suggests that fee fights alone may be
taken to federal District Court for resolution.
• A similar issue arose in anti-discrimination litigation
against the federal government where the plaintiff did
not want to challenge a favorable finding of liability,
but only wanted to challenge the adequacy of the fee
award. See, e.g., Scott v. Johanns, 409 F.3d 406 (D.C.
Cir. 2005).
Interplay Between Civil Actions and Petitions
for Review to the Court of Appeals
• It is unclear whether the party dissatisfied with the agency head’s
order can seek de novo proceedings in federal district court and/or
and an APA review in the Court of Appeals.
• It seems clear that only the complainant can bring a de novo in
federal district court. But, any person “adversely affected or
aggrieved by an” agency head’s order may obtain review in the
Court of Appeals.
• It is not clear how it would play out if the employer petitioned to
the Court of Appeals before the complainant initiated a civil action.
• And, it is not clear whether the complainant has two choices in
certain circumstances. If the complainant is dissatisfied with an
agency head’s order that denies relief, in whole or in part, it is
clear that the complainant can sue de novo in federal district
court, and, as he/she is seemingly “adversely affected or
aggrieved by an order,” seemingly also able to file a petition for
review to the Court of Appeals. Thus, there may be circumstances
where complainant does not want full de novo review, but only
legal review (e.g., the legal propriety of the fee award), and
therefore a petition to the Court of Appeals may be the wiser
course of action.
Camel’s Nose Under the Tent
• Section 1553(d)(2) prohibits pre-dispute
arbitration agreements to resolve disputes
involving alleged reprisals under this statute
except in the circumstance where there is a
collective bargaining agreement.
• Is this the first volley in the battle to come to
eliminate pre-dispute arbitration agreements
generally in employment cases? See Arbitration
Fairness Act of 2009, H.R. 1020, 111th Cong.
(2009), available at
http://www.opencongress.org/bill/111-h1020/text.
Settlement
• In light of the extraordinarily sweeping
language of § 1553(d)(1) stating that “the
rights and remedies provided for in this
section may not be waived by any agreement,
policy, form, or condition of employment . . .”,
a question arises regarding settlements.
• That language is so broad that, on its face, it
would seem to prohibit settlement
agreements wherein, in exchange for
consideration, the complainant waives all
rights and remedies under this statute.
• Immediate guidance on this language would
seem to be needed.
General Release’s Effect on Qui
Tam Claims
•
•
•
United States ex rel. Ritchie v. Lockheed Martin Corp., 2009 U.S. App.
LEXIS 5269 (10th Cir. Mar. 6, 2009) (Court enforced release where the
allegations of fraud had been disclosed to the government before the
relator signed the general release; Judge Briscoe dissented on the
release issue)
U.S. ex rel. Al-Amin v. George Washington University, 2007 WL 1302597
(D.D.C. May 2, 2007) (Court held that a general release, which became
effective two days after the relator filed her qui tam complaint, was
unenforceable because it was contrary to public policy concerns
reflected in the False Claims Act.)
United States ex rel. Radcliffe v. Purdue Pharma L.P., 2008 U.S. Dist.
LEXIS 81688 (W.D. Va. Oct. 14, 2008) Court held that general release did
not bar qui tam action. See also, United States ex rel. Green v. Northrop
Corp., 59 F.3d 953 (9th Cir. 1995); United States ex rel. Hull v. Teledyne
Wah Chang Albany, 104 F.3d 230 (9th Cir. 1997); United States ex rel.
Gebert v. Transp. Admin. Servs., 260 F.3d 909, 916 (8th Cir. 2001); United
States ex rel. Longhi v. Lithium Power Techs., Inc. 481 F. Supp. 2d 815
(S.D. Tex. Mar. 23, 2007) (Court declined to enforce the general release to
preclude the qui tam claim); United States ex rel. Bahrani v. Conagra,
Inc., 183 F. Supp. 2d 1272, 1275-78 (D. Colo. 2002); United States ex rel.
DeCarlo v. Kiewit/AFC Enters., Inc., 937 F.Supp. 1039, 1043-47 (S.D.N.Y.
1996);
Tolling Agreements
• Unlike the Department of Labor (OSHA) in SOX cases,
will tolling agreements be honored by the IG’s? At
least one ALJ has held that a tolling agreement entered
into by the parties in furtherance of settlement
negotiations in a SOX case was ineffective. See
Szymonik v. TyMetrix Inc., 2006-SOX-50 (Mar. 8, 2006).
• The EEOC in its Compliance Manual specifically states
that such tolling agreements are to be respected.
EEOC Compliance Manual, ch. 2-IV(D)(3) (May 12,
2009), available at
http://www.eeoc.gov/policy/docs/threshold.html (“The
time requirements for filing a charge may be waived by
the parties by mutual agreement, thereby allowing a
charging party to file a charge beyond the 180/300-day
statutory time limit. For example, the parties may
agree to waive the limitations period so they may
engage in private negotiations . . .”).
Are Inter-State Agencies
Covered?
• Section 1553(g)(5) is silent with respect to
inter-state agencies like the New York Port
Authority, the Delaware River Basin
Commission, the Great Lakes Basin
Compact, the Interstate Water Commission
on the Potomac River Basin, the Appalachian
Regional Commission, the Chesapeake Bay
Commission, Metropolitan Washington
Airports Authority, and the Susquehanna
River Basin Commission.